A new report says the Medicare reforms enacted by the recently passed federal balanced-budget law won't save as much money as previously thought, but provider groups say that shouldn't prompt Congress to go after Medicare again next year.
Projections released last week by the Congressional Budget Office show Medicare payments to providers will be nearly $99 billion less over the next five fiscal years than they would have been absent the budget law.
But the CBO originally projected the changes would trim the growth in Medicare spending by more than $103 billion over that time. Hence, the budget law will come up almost $5 billion short of its Medicare savings goal.
Among the changes implemented by the law was a one-year freeze on Medicare payment rates to hospitals for acute-care services. The hospital industry, led by the American Hospital Association, vehemently opposed the freeze. One fear the AHA had was with a freeze in place, Congress easily could extend it if Medicare savings goals weren't being met.
Although the CBO says projected Medicare savings will come up short, a robust economy should make up the difference, alleviating the need to target Medicare again and possibly extend the payment freeze.
The CBO estimated the federal budget will reach a $32 billion surplus by 2002 but warned that an economic downturn could change the forecasts.
According to most observers, Congress is unlikely to revisit Medicare until the long-term Medicare commission called for in the budget law reports its findings in March 1999.
"One impact of these numbers is that there is less likelihood that (Congress) will revisit Medicare and Medicaid for budget purposes," said Thomas Nickels, vice president of federal relations at the AHA. "That doesn't mean that they won't revisit them for trust fund solvency purposes, but this would seem to indicate that more cuts won't be necessary."
Overall, Medicare spending will rise an average of 6% a year through fiscal 2002 to $279 billion from $209 billion in fiscal 1997, the CBO said (See chart).
The CBO's estimate of how much Medicaid savings will be generated by the budget law also changed. Initially, the law's reforms were projected to save more than $10 billion in Medicaid spending over five years. Now, the CBO said the changes will save only about $7 billion over that time.
Federal Medicaid spending is projected to rise to $137 billion in fiscal 2002 from $96 billion in fiscal 1997.